That there might be circumstances that would be sufficient to divide the period during which the trade was carried on. Circumstances might come to the knowledge of the executors which would render it unconscientious to continue the property longer in the trade; they might embark it in a new trade. "I do not say what would be the effect of such occurrences; it might then be argued that it was a perfectly new concern, and gave to the cestui que trusts a new right, to adopt or to relinquish it."

He held that the plaintiffs were entitled to an account of the profits, for the purpose of ascertaining whether that or the interest would be most beneficial to them.-And a decree of reference for that purpose was made.”

From these cases, I think the English rules appear clearly to be, that an executor for mere detention of the monies of the estate, is chargeable with interest at 4 per cent. only. That when he has made a profit, he cannot retain it for himself, but the estate shall have it, and an inquiry as to its amount will be given. If the profit cannot be ascertained or the inquiry is waived, the court gives but 5 per cent. upon the sums or balances chargeable to him. But if he has made no profit (as in Pococke v. Reddington) and has been guilty of the same misfeasance, he is chargeable with what the court considers might reasonably have been made, viz. interest at 5 per cent. upon the amount received by or chargeable to him. That misconduct may lead the court to charge 5 per cent, even in a case of mere detention; but this is upon the fact that by such misconduct, that rate of gain has been actually lost to the estate; not upon a Hart, 11 Ves. Supposition, however probable, that as much might have been gained. And lastly, that a case may be so circumstanced of such gross violation in an executor of duty imposed upon him by the Will, as to lead the court to allow compound interest; but it is singular, that in the whole range of English decisions upon the unwarrantable conduct of executors in all varieties, there is but a solitary case giving compound interest, and that placed by the court upon the peculiarity of the trust.

See Roche v.

58.

1 Johns. Rep. 610.

Such are the English rules upon this subject. Our court Iras gone one step further.

"In Schiefflin v. Stewart the bill was by an administrator to settle the estate, to account, and to pay over the balance. It appeared on the report, that he had mixed the monies of the estate with his own private property, and had employed them in his trade. The Master charged compound înterèst: An exception was taken, which the Chancellor overruled. He states that the allowance of compound interest is often essential

to carry into complete effect the principle of the court, that no profit or gain shall be derived to the trustee from his use of the trust funds. That there were cases, in which, in order to reach the profit when it is not otherwise ascertained, they adopt the very rule of computation contained in the report. He cites Foster v. Foster, Raphael v. Boehm, and Dornford v. Dornford.

The Chancellor then makes a statement, to shew the great profit which the executor would have gained by charging simple interest only. In July 1805, he had on hand $33,000. If he received by July 1806 the simple interest only $2310, he would have the use of it for 9 years (the time of taking the account) free of interest. The next year he received another year's interest, and would then have on hand $4620 for eight years for his own use, and so on.

Lord Eldon in Raphael v. Boehm, makes a similar statement. The Chancellor further shews, that by the civil law there was an increase of interest for the conversion of money to the Tutor's own use."

It is to be observed, that the three cases of Newton v. Bennett, Foster v. Foster, and Dornford v. Dornford, which the Chancellor inclines to think were cases of compound interest, were clearly not so, as appears by the statement of the Vice Chancellor in Tebbs v. Carpenter.

C. 528.

In Manning v. Manning, the executors admitted they 1 Johns. C, had applied the money to their own use, simple interest alone was charged. The point however does not seem to have been much litigated.

It is of great importance that precision in the rules of the court upon this subject should be attained.

I conclude from the authorities, that in cases of employment, the question always is, what profits has the party made.

If the executor has invested the estate in a particular speculation or concern, the party may trace out the profit made by the employment and have the whole benefit to himself. In such a case as long as the fund continued in operation, by revesting returns, ro interest could be allowed, because the profits would be in lieu of it. If the speculation was wound up before the account was taken, the aggregate sum of the original fund, and the profits accrued, would be chargeable; and then the question would be whether interest should be chargeable on the original capital only or on that aggregate sum. From Piety v. Stace, it would seem, interest would be given upon the whole, which would be

.

something like compounding, as interest would be given upon the produce as well as the principal.

If the gain was admitted to be equal to compound interest, that must be accounted for, and where there has been confessedly some profit, which is not ascertained, or would be very difficult to ascertain, our court, as before shewn, has inclined to allow compound interest. But if the accounting party was to shew that the profits of the trade did not amount to that, it would not be possible for the court, I conceive to grant it, particularly under Treves v. Townsend. It is true Lord Thurlow's principle in that case is varied, and the English court would not now admit the defendant to shew a gain less than 5 per cent. Pocoke v. Reddington gave 5 per cent. upon the value of the fund where the whole was lost, of course not less than that would be given, although the speculation yielded less than 5 per cent. ; but then it is upon the original principal merely. This addition of one per cent. the court seems to have considered as a sufficient punishment upon the executor for his misfeasance in the naked case of employment in trade where there have been no profits, and as a reasonable supposition of profits where they are not got at.

The statement of the Chancellor Kent and Lord Elden is undoubtedly correct, admitting the Executor to have uninterruptedly made his interest upon the yearly amount received by him, for interest. But the principle of the English court certainly is not, that in order to reach unknown profits, it will suppose as a general rule, that they are equal to compound interest upon the sum employed. But the principle is that the actual profits shall be accounted for, which may be to that amount or less. And that if the party does not choose to go for them, or cannot trace them, he can have but five per cent. upon the original sums chargeable.

It may be useful to make some statements to shew the effect of charging compound interest.

Compound interest at 7 per cent. will double a sum in ten years and about ninety days. The gain beyond simple interest by compound on $100 at 7 per cent. will be in five years $5,24 averaging $1,05 per year. In ten years the gain is $26,66 averaging $2,66 per year.

In fifteen years it is $70,81, averaging $4,7 2. And in twenty years $146,81 averaging $7,34.-A scale of the gain for each of twenty years and the average per year is given Appendix, No. 36.

From these statements it is apparent, that when the court charges a party with compound interest as an equivalent for

profits of trade, if the period of charging is five years, it assumes those profits to be on an average $8,05 per cent. per annum on the capital. If for ten years it assumes them to be $9,66 per cent. If for fifteen years $11,71 and if for twenty years $14,33. This shews that the time of the employment becomes of great importance in a question of charging compound interest against an executor. This is done upon the supposition of so much being made by employment in his trade. Now if from the length of time for which compound interest runs, it is unreasonable to presume such large profits have been made, he should not be charged.

I do not think that for the period of ten years the rule of Schiefflin v. Stewart, would be improper; with this important provision however that the executor may always be at liberty to shew that less has been actually made. Our rule would then charge him upon the presumption that his trade yielded $9.66 per cent. per annum, upon the capital on hand at the commencement of the time, which would be $2,66 per cent. beyond ordinary interest.

The English rule gives one per cent. more in a similar case, and the difference between us would be in the increase of $1, 66 per cent. This would be the highest rate of profit supposed being upon the sum on hand at the commencement; and upon each subsequent sum received, the rate of profit would be presumed according to the year in which it was received. The scale before referred to shews such rate,

There is another consideration of importance. It will occur in See Appena large class of accounts, that the mode of stating by giving in- dix, No. 31 terest upon each sum from the moment it is charged will make and 34. the amount against the accounting party greater than by compounding interest at the end of each year—that is, by carrying the interest upon the balance found at the beginning of a year into the balance struck at its close, and computing interest for the next year upon the whole; no interest being computed upon the sums when received.

Now it is clear that when compound interest is charged, that is the only allowable mode of doing it. The decree in Raphael v. Boehm gave interest upon sums from the time of reception, and then half yearly rests for the purpose of compounding. It is in the former as well as the latter particular, that Lord Elden censures the decrec, stating it was peculiar in these points, and was expressed in terms, which he hoped would never be found in a decree again.

By this recognized mode of the court, the balance due at the end of a given year, composed of principal and interest, yields

interest through the subsequent year; but no interest is allowed upon any sum received in the course of such year from its reception to the close of the year. If therefore the whole compound interest does not amount to the whole intermediate interest from the time of reception, till the annual balance is struck, the accounting party gains by compounding, and if the account is for a small number of years, or the balances at the outset small, it may often occur that this will be the case. In the statement of Lord Elden, and Chancellor Kent, it is assumed that the interest is not received until the close of the year, and therefore they say, as it then began to yield interest, interest shall be charged upon it, that is, it shall be compounded.

An executor will be charged interest, for not putting out balances, unless it is necessary he should retain them for the purposes of the estate.

"In Franklin v. Firth, Lord Thurlow said, that if the money was kept to answer the exigencies of the testator's affairs, it would be an excuse for not paying it over; but outstanding demands even on probable grounds, were no reason why the executors should not lay their testators' money out."

"In Forbes v. Ross, he said, that the question whether an executor should be charged with interest on the assets retained in his hands turns on this, whether the fund has been so kept for any other purpose than that of discharging the growing claims upon it. It frequently may be necessary for the executor to keep large sums in hand, especially during the first year, in which case, such necessity is so fully acknowledged, that according to the constant course of the court, the fund is not considered as distributable until after that time."

In Tebbs v. Carpenter, the Vice Chancellor said, "That the argument that it was necessary for the executors to keep the balance which they had in 1797, to answer the contingencics of the next year, would have had weight, if in fact it was necessary, and there were pressing demands which required it ;but the current receipts were greatly more than sufficient to answer the current payments, and no evidence was adduced to shew there was any necessity for keeping that balance in their hands. The same remark applies as to the subsequent balances in the succeeding years."

Retaining money at a Bankers to the exccutor's credit is considered equivalent to an employment in trade,